ServiceMaster faces wrath of Wall St.

ServiceMaster Co., known for mixing Christian faith with its varied businesses, is facing judgment day.

CEO Patrick Spainhour is being pressured to sell all or parts of the company to remedy lackluster earnings and an anemic stock price. Private-equity firms are interested in buying the company, whose businesses include TruGreen ChemLawn service and Terminix pest control, the Wall Street Journal reports.

So far, Mr. Spainhour has shown no interest in selling. That's frustrated shareholder Newcastle Capital Management L.P. The hedge fund, which holds 1% of ServiceMaster's stock, sent a letter this month asking the company to divulge any buyout offers it has received.

"This company owns all the leading businesses (in its markets) and it's underperformed in every instance," says Mark Schwarz, Newcastle's managing member. "They paint a picture of a board that's not interested in considering alternatives." Mr. Schwarz warned that disgruntled shareholders are likely to challenge the election of directors next year if the company isn't more responsive.

Chicago-based Ariel Capital Management LLC, ServiceMaster's second-largest shareholder with a 10% stake, said earlier this year that the company should consider finding a buyer or going private.

A spokesman for Downers Grove-based ServiceMaster says it plans to respond to Newscastle's request. Mr. Spainhour is expected to present strategies to boost profit through 2009 during a meeting Tuesday with investors and analysts in New York.

"We've been putting together these plans with an eye toward increasing shareholder value," the spokesman says. "We've got a very strong and detailed presentation."

Mr. Spainhour, former CEO of apparel chain Ann Taylor and a ServiceMaster director since 2005, was a surprise choice for CEO and chairman in June after the resignation of Jonathan Ward in May. His first months at the helm have been rocky. Third-quarter profit slipped 17% from a year earlier to $68 million, or 23 cents a share, because of weather-related factors. Sales rose 5% to $971.4 million. In July, the stock sank to its lowest price in almost three years but has climbed 25% since, partly on takeover speculation. It closed Friday at $12.05.

ServiceMaster, which plans to move to Memphis next year, has pursued dual goals of honoring God and boosting profit since its founding in 1929. The company opened its annual meeting in May with a prayer. "Honor God in all we do" is the first corporate objective on the company's Web site. It's a combination that probably will end if ServiceMaster is sold. But most investors are more concerned about the bottom line.